M&G Investments’ Stuart Rhodes, who in January apologised to investors for poor performance, looks to have been hit with a wave of withdrawals this year, according to data firms.
The giant M&G Global Dividend fund, which Mr Rhodes manages, has lost 9 per cent of its assets under management so far this year, according to data from FE Analytics, dropping to £8.3bn from £9.1bn.
But taking the fund’s positive performance in the period into account, it could have lost more than that in net investor outflows.
FE Analytics estimates suggest investors have pulled out £1.1bn in the past six months.
Investors have turned cautious on the fund since its lacklustre performance in 2014, when it returned just 2.4 per cent, compared with average returns of more than 7 per cent for its global equity peers.
The fund has continued to lag so far this year. Its 4.5 per cent return to May 22 compares poorly with the MSCI AC World index and the average fund in the IA Global sector, which both delivered 7.4 per cent.
In January, Mr Rhodes wrote to clients admitting he had “made some mistakes in 2014” and the fund had been hit by a combination of stock-specific issues, selling stocks too early and not having enough exposure to the US. He said he thought not having enough in the US cost him one percentage point in performance terms and that letting the fund “drift into an underweight position has been a mistake”.
Since his apology the manager has been trying to alter the portfolio and has bought three US stocks: BlackRock, the investment manager, Time Warner, a global leader in media and entertainment, and LyondellBasell, a chemical company.
However, Mr Rhodes thinks valuations in the US are looking stretched and has sold his holdings of retailers L Brands and Walmart.
He therefore remains underweight the US, holding 48.3 per cent at the end of April, compared with 50.7 per cent for the index, according to the fund’s factsheet.
Elsewhere, the manager said he had been finding new openings as a result of a lower oil price: “We have been increasing positions in companies that we believe have become mispriced because of misconceptions around their sensitivity to the lower oil price.”
One such company is Methanex, a Canadian worldwide supplier of methanol, which is now Mr Rhodes’ largest holding, making up 6.3 per cent of the portfolio.
The manager said: “Adding to holdings such as Methanex has helped bring the portfolio valuation down to its cheapest level since the financial crisis, which, combined with the healthy dividend increases announced so far this year, gives us a great deal of confidence for our future.”
Mr Rhodes has invested also in Gibson Energy, an oil and gas services provider, which is now his third-largest holding, at 4.5 per cent.